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1.The ideal quantity of total output: a. is called Natural Real GDPb. yields an unemployment rate of
1.The ideal quantity of total output:
a. is called Natural Real GDP
b. yields an unemployment rate of
zero
c. Both of the above
d. Neither of the above
2.According to Marx:
a. income would be distributed very unequally in a market economy
b. excessive demand would lead to increasingly severe downturns in the business cycle
c. after many years of economic stability, a market economy would suddenly collapse
d. All of the above
3.According to Say's Law:
a. supply creates its own demand
b. demand creates its own supply
c. the act of consumption leads to an equivalent amount of production
d. Both b. and c. above
4.According to Keynesian theory:
a. factors other than the interest rate affect savings and investment
b. if investors are pessimistic about future returns, they may not invest more as interest rates fall
c. Both of the above
d. Neither of the above
5. Consumption:
a. is determined primarily by the level of disposable income
b. is directly related to Real GDP
c. is the largest component of Total Expenditures
d. All of the above
6. The marginal propensity to consume is:
a. the slope of the consumption function
b. the change in consumption divided by the change in income
c. Both of the above
d. Neither of the above
